IRAQI OFFICIAL SAYS CASES OF 69 AMERICAN HOSTAGES BEING STUDIED

BAGHDAD, IRAQ, OCT. 6 -- An Iraqi official said today that his government is "studying the cases of" 69 American hostages held by Iraq whose release the United States has requested on medical grounds.

Most of the 69 are believed to have heart problems, and one is reportedly a diabetic. The official, interviewed here today on condition he not be identified by name, said he could give no indication how long it would take Iraq to review the American list.

The official said he was not aware of any plan by Iraq to release hostages older than 55 years. Speculation about such a plan was raised this week when the government asked British companies and the Irish Embassy for lists of workers over 55.

The Iraqi government believes that the major powers confronting it in the Persian Gulf crisis are moving closer to its demand that Kuwait's fate be linked to broader Middle East issues, but not close enough that a real dialogue is now possible, the official said. He added that diplomacy between the United States and Iraq had become a pattern of "contact but no dialogue."

Meanwhile, a senior Soviet envoy left Iraq today saying that he was more hopeful of a peaceful settlement to the gulf crisis after two days of talks with Iraqi President Saddam Hussein. "I am not pessimistic any longer toward the prospects of a political solution for the crisis," Yevgeny Primakov, a member of the Soviet Presidential Council, told reporters before flying home to Moscow.

Primakov did not elaborate on the reasons for his relative optimism, but he added that he was "greatly satisfied with the results" of his talks with Saddam and Foreign Minister Tariq Aziz.

Primakov's talks included Soviet appeals for the departure of some of the estimated 5,000 Soviets still in Iraq who have had difficulty getting exit visas to return home. Saddam assured Primakov that all Soviets who complete their work contracts will be permitted to leave, according to a Soviet television report Friday.

In the interview today, the Iraqi official acknowledged that his government had offered "no official response" to President Bush's speech Monday at the United Nations, in which he said an Iraqi withdrawal from Kuwait would offer new opportunities for a settlement of the Palestinian issue. "I think there was some impression left {within the government here} from President Bush's speech . . . that this is a step closer to our position," the official said.

But, he added, it "was not satisfactory {and} did not go to the extent of accepting a process or making an explicit linkage" of the two issues. Saddam declared 10 days after his troops invaded Kuwait Aug. 2 that demands for Iraq's withdrawal would have to be linked to the settlement of the Arab-Israeli conflict and resolution of the political troubles of Lebanon.

The Iraqi official said Iraq regards Bush's speech as part of a pattern that includes an earlier U.N. speech by French President Francois Mitterrand saying, "If Iraq were to affirm its intention to withdraw its troops and free the hostages, everything would be possible."

The official said Iraq had noted "positive" statements Friday by British Foreign Secretary Douglas Hurd and by Primakov, who called "on Israel to work out a process" for peacefully resolving the demands of the Palestinians.

"I'm not saying necessarily that {the major powers} are responding to the initiative of Saddam Hussein, but they are citing one of the realities of the region," he said. He said the gulf crisis had forced governments to refocus their attention away from events in Europe and onto the Arab world, a shift that might be creating more "realistic" views of Arab concerns, which he said would be "encouraging toward reaching out toward a solution, diplomatically."

The official said Iraq would look with particular favor on initiatives by France. "If it comes from Mitterrand, it may be dealt with differently because basically the confrontation has been between Iraq and the {United States}," he said. "France has been viewed as an ally of the United States but not somebody who has initiated the crisis."

The official declined to discuss precisely what links might be formed between the Kuwaiti and Palestinian issues, calling that "premature."